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Alberta, Quebec threaten Supreme Court challenge to single regulator

The federal Finance Minister will push ahead with the creation of a long-debated national securities regulator, despite strong opposition from Quebec and Alberta

Ottawa (14 January 2009) – Alberta and Quebec have outright balked at the recommendations contained in the final report of a panel the federal finance Minister appointed to consider the long-standing dispute over who should regulate the buying and selling of stocks and bonds.

The panel, led by former Conservative cabinet minister Tom Hockin, after a year of study is urging the creation of one national regulator, arguing that the current system of 13 provincial and territorial bodies fails to guard against the interests of Canadian investors at a time of market chaos.

Both governments have responded to the report by threatening a Supreme Court challenge of the federal government’s authority to establish a national regulator.

Manitoba's Finance Minister has also lined up with Quebec and Alberta, saying the federal government's desire for a national securities regulator risked impeding cooperation between Prime Minister Stephen Harper and the premiers on reviving the country's flagging economy at this week’s First Ministers meeting.

Unmoved, the federal Finance Minister Jim Flaherty vowed to establish a national regulator with willing provinces. “Canada remains the only industrialized country without a single securities regulator,” Mr. Flaherty stated. “So, we are now ready to change that, with the goodwill and co-operation of our provincial and territorial partners.”

Mr. Hockin argues that this could be done without Alberta and Quebec. Ottawa needs only five or six of Canada's 13 jurisdictions, accounting for two-thirds of market value, to have the critical mass to go ahead with a single regulator.

Measures and details of the proposed national securities regulator will be included in the 2009 budget.

Canada loses about $10 billion in economic output each year and 65,000 jobs because of its fragmented securities regulation, according to a 2007 government-commissioned report by John Coffee, a Columbia University Law School professor.

Another study funded by the Investment Dealers Association of Canada found that adopting a single securities regulator would save the brokerage industry $73 million a year directly, not including intangibles and potential indirect costs.